Walmart 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Walmart annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

2007 Annual Report

Table of contents

  • Page 1
    2007 Annual Report

  • Page 2
    ... - Wal-Mart's mission around the world Financial highlights Fiscal Years Ended January 31, (Dollar amounts in millions, except per share data) 2007 $ 344...Cost of sales Income from continuing operations Long-term debt Return on assets(1) Return on shareholders' equity (2) Diluted earnings per share...

  • Page 3
    ... the Company in 1962 on a simple proposition - save people money so they can live better. That proposition is still synonymous with Wal-Mart because we continue to deliver on our promise of every day low prices for quality products and services. As a result, our customers around the world shop...

  • Page 4
    .... The long-term business member who runs a convenience store, and visits the club weekly for his merchandise and office ffi supplies, finds the perfect diamond when he's ready to propose. From cleaning supplies to big screen plasma televisions, customers and members count on us for great values. 2

  • Page 5
    ... Kingdom, Asda works with our suppliers to reduce the salt content in privatelabel foods. An exciting announcement this past year in the United States was the rollout of f the $4 generic prescription program. The Associated Press (November 2, 2006) summarized our initiative this way: "Wal-Mart has...

  • Page 6
    4

  • Page 7
    ... can change and enhance its value to the world and to our shareholders. The need for sustainable business practices is increasingly urgent. What's good for the environment can be good for business. Wal-Mart merchandise should be both affordable and sustainable so working families don't have to make...

  • Page 8
    ... success. Wal-Mart creates jobs, often in areas that need them the most. When Wal-Mart was close to opening its first discount store in the city of f Chicago, more than 15,000 applications were received for 450 available jobs. In 2006, Wal-Mart de Mexico interviewed 100,000 applicants for 17,409 new...

  • Page 9
    ...Prevention Wal-Mart Home Office and Distribution Center Buenos Aires, Argentina Bobby Higgins (pictured right) 20-year associate Starting position Part-time cart pusher Sam's Club Springdale, Arkansas, United States Current position Market Manager Sam's Club Colorado, Wyoming, Idaho, Montana, South...

  • Page 10
    ... neighbors Building homes. Teaching children. Funding college scholarships. Donating merchandise. Raising money. These are just a few examples of f the support that Wal-Mart and our associates provide in thousands of f neighborhoods around the globe to make a difference ff in their own communities...

  • Page 11
    ... 20 cents to the organization. 170,000 grants awarded in the United States Associates in Action Needy children in Sioux City, Iowa have received new bikes and helmets, thanks to the associates at Wal-Mart #1361. These associates also are busy taking part in the American Cancer Society's Relay for...

  • Page 12
    ...our financial fi and human resources in areas where we can unlock k the most value. In our International division, we call this approach "major in the majors." Our results clearly demonstrate that this is the right strategy. Last year, we opened the doors to seven new Wal-Mart Supercentres in Canada...

  • Page 13
    ... world. Wal-Mart holds its senior leaders accountable for meeting diversity goals each year. Every officer's ffi compensation and performance evaluation is dependent on achieving very specific objectives in the area of f diversity. In fact, all officers but one met their goals this year. "Wal-Mart...

  • Page 14
    ...us who have served Wal-Mart have paid a price to build a special Company - whether it means working on weekends, keeping a modest office ffi space, or always putting others before ourselves. But there is a reward, and it is not just working for a special Company; it is a special opportunity to touch...

  • Page 15
    ... talented, dedicated people. Tomorrow's Leaders I know that the future leaders of f our Company are already in place throughout our organization, working closely with Wal-Mart associates and our current management team. Each day, these leaders are gaining the knowledge and experience they will need...

  • Page 16
    ..., Wal-Mart Stores Division Linda M. Dillman Executive Vice President, Risk k Management, Benefits fi and Sustainability Weekly officer meetings provide the opportunity to review the Company's ongoing performance, focus on initiatives to drive sales and customer service, and address broader issues...

  • Page 17
    ...President, Logistics and Supply Chain Gregory L. Johnston Executive Vice President, Operations, Sam's Club William S. Simon Executive Vice President, Chief f Operating Officer, ffi Wal-Mart Stores Division Michael T. Duke Vice Chairman, Responsible for International Thomas A. Mars Executive Vice...

  • Page 18
    ... Systems: Driving Value for Customers, Associates, and Shareholders In 2006, Wal-Mart's Information Systems Division won the Information Integrity Coalition's Award for Innovation, an accomplishment that underscores its industryleading stature. Innovation is taking place in a number of f areas...

  • Page 19
    ...choices in the Wal-Mart aisles. In our grocery area since 1993, Great Value® serves as our customers' ' brand for quality at every day low prices. The Wal-Mart Deli Take 'N' ' Bake Pizza is an excellent value and easy to bake at home. Line extensions also include Deli take-and-bake chicken pot pies...

  • Page 20
    Businesses balance returns with growth Total number of f locations: 3,443 as of f January 31, 2007 Total FY '07 sales: $226 billion the last year, Wal-Mart U.S. laid out a three-year roadmap for driving returns and growth. This roadmap is centered around three broad pillars: customer relevancy, ...

  • Page 21
    ... of f natural lighting in our new clubs, along with expanding our Fax 'N' ' Pull/Click 'N' ' Pull area to process orders from our members more quickly. Improving Club Performance We work hard to make Sam's Club more appealing for our members. Speed-to-floor fl inventory y management is accelerating...

  • Page 22
    Strengthen our investment discipline (Pictured left to right) Michael Fung, Senior Vice President, Finance, Wal-Mart Stores Division; Sam Dunn, Senior Vice President, Finance, Sam's Club; Wan Ling Martello, Senior Vice President and Chief Financial Officer, Wal-Mart International. 20

  • Page 23
    ...our Company's return on investment, or ROI, improve our comparable store sales and improve our working capital productivity. The outcome is a focus on the most capitalefficient ffi opportunities and a continued focus on the customer. Wal-Mart U.S. improved its process for approving new store capital...

  • Page 24
    Grow with a well-mapped strategy Every store and club we opera ate around the world undergoes a very thorough analysis by our executive-level Real Estate Committee. Every month, the e Committee assesses the viability of f new w store and club projects, expansions and store relocations. relocations ...

  • Page 25
    ... at our businesses around the world. Internationally, we are leveraging the strength of Wal-Mart to provide innovation and benefits to all markets, including emerging areas, such as China and India. We honor the brand, such as Asda, where the brand is important locally to our customers. And, where...

  • Page 26
    Wal-Mart Stores, Inc. These are our banners worldwide. We are united in saving our customers money so they can live better.

  • Page 27
    ... Statements 60 Report of Independent Registered Public Accounting Firm 61 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting 62 Management's Report to Our Shareholders 63 Fiscal 2007 End-of-Year Unit Count 64 Corporate and Stock Information Wal-Mart...

  • Page 28
    ... Long-term obligations under capital leases Shareholders' equity Financial ratios Current ratio Return on assets(2) Return on shareholders' equity(3) Other year-end data Discount stores in the United States Supercenters in the United States Sam's Clubs in the United States Neighborhood Markets in...

  • Page 29
    .... The acquisition of the Asda Group PLC and the Company's related debt issuance had a significant impact on the fiscal 2000 amounts in this summary. Years prior to 1998 have not been restated for the effects of the change in accounting method for Sam's Club membership revenue recognition as the...

  • Page 30
    ...and restaurants, including discount stores, supercenters and Sam's Clubs that operate outside the United States. For certain financial information relating to our operating segments, see Note 11 to our Consolidated Financial Statements. The Retail Industry We operate in the highly competitive retail...

  • Page 31
    ... to our Consolidated Financial Statements. Net cash provided by operating activities of continuing operations was $20.2 billion for fiscal 2007. Company Performance Measures Management uses a number of metrics to assess the Company's performance including: • comparable store sales, • operating...

  • Page 32
    ... total Company sales in fiscal 2007, when compared to the previous fiscal years resulted from the more rapid development of new stores in the International and Wal-Mart Stores segments than the Sam's Club segment. We expect this trend to continue for the foreseeable future. Our total gross profit as...

  • Page 33
    .... Our expansion programs consist of opening new units, converting discount stores to supercenters, relocating units that result in more square footage, as well as expanding existing stores. Segment expansion during fiscal 2007 included the opening of 15 discount stores, 12 Neighborhood Markets and...

  • Page 34
    ..., or 12.0%, of additional unit square footage (this includes the consolidation of CARHCO, which added 372 stores and 6.5 million square feet in February 2006) and • the $1.5 billion favorable impact of changes in foreign currency exchange rates during fiscal 2007. The fiscal 2006 increase in the...

  • Page 35
    ...fiscal 2007, we paid dividends of $2.8 billion, made $15.7 billion in capital expenditures, paid $1.7 billion in cash to repurchase shares of our common stock, received $7.2 billion from the issuance of long-term debt, repaid $5.8 billion of long-term debt and repaid $1.2 million of commercial paper...

  • Page 36
    ... the lease terms. Capital Resources During fiscal 2007, we issued $7.2 billion of long-term debt. The net proceeds from the issuance of such long-term debt were used to repay outstanding commercial paper indebtedness and for other general corporate purposes. Management believes that cash flows from...

  • Page 37
    ... to adjusted average debt(4) Cash flow from operations to average debt Selected financial information Fiscal year 2007 operating rent expense Fiscal year 2006 operating rent expense Fiscal year 2007 capitalized interest January 31, 2007 Commercial paper Long-term debt due in one year Obligations...

  • Page 38
    ... designated debt of approximately ¥142.1 billion and ¥87.1 billion as of January 31, 2007 and 2006, respectively, as a hedge of our net investment in 36 Wal-Mart's Expansion Program FY '08 Expansion Supercenters Discount Stores Neighborhood Markets Sam's Club Total U.S. Expansion International...

  • Page 39
    ... of the financial statements. Inventories We value our inventories at the lower of cost or market as determined primarily by the retail method of accounting, using the last-in, first-out ("LIFO") method for substantially all our Wal-Mart Stores segment's merchandise. Sam's Club merchandise and...

  • Page 40
    ... statements are subject to certain factors, in the United States and internationally, that could affect our financial performance, business strategy, plans, goals and objectives. Those factors include, but are not limited to, the cost of goods, information security costs, labor costs, the cost...

  • Page 41
    ...-average number of common shares: Basic Diluted Dividends per common share See accompanying notes. 12,603 (425) 12,178 (894) $ 11,284 $ $ 2.92 (0.21) 2.71 $ $ 2.73 (0.05) 2.68 $ $ 2.46 (0.05) 2.41 $ $ 2.92 (0.21) 2.71 $ $ 2.72 (0.04) 2.68 $ $ 2.46 (0.05) Wal-Mart 2007 Annual Report 2.41...

  • Page 42
    ... Balance Sheets (Amounts in millions except per share data) Wal-Mart 2007 Annual Report 40 January 31, Assets Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other Current assets of discontinued operations Total current assets Property and equipment, at cost...

  • Page 43
    Consolidated Statements of Shareholders' Equity Accumulated Capital in Other Excess of Comprehensive Par Value Income (Amounts in millions except per share data) Number of Shares Common Stock Retained Earnings Total Balance - January 31, 2004 Comprehensive income: Net income Other ...

  • Page 44
    ...flows from financing activities (Decrease) increase in commercial paper Proceeds from issuance of long-term debt Dividends paid Payment of long-term debt Purchase of Company stock Payment of capital lease obligations Other financing activities Net cash used in financing activities Effect of exchange...

  • Page 45
    ... 1 Summary of Significant Accounting Policies Consolidation The Consolidated Financial Statements include the accounts of Wal-Mart Stores, Inc. and its subsidiaries ("Wal-Mart" or the "Company"). Significant intercompany transactions have been eliminated in consolidation. Investments in which the...

  • Page 46
    Notes to Consolidated Financial Statements Wal-Mart 2007 Annual Report 44 Goodwill is evaluated for impairment by determining the fair value of the related reporting unit. Fair value is measured based on a discounted cash flow method or relative market-based approach, which utilizes multiples of ...

  • Page 47
    ... of print and television advertisements. Pre-Opening Costs The costs of start-up activities, including organization costs and new store openings, are expensed as incurred. Share-Based Compensation The Company recognizes expense for its share-based compensation based on the fair value of the awards...

  • Page 48
    ...$13,274 Short-term borrowings consisted of $2.6 billion and $3.8 billion of commercial paper at January 31, 2007 and 2006, respectively. At January 31, 2007, the Company had committed lines of credit of $6.5 billion with 54 firms and banks, which were used to support commercial paper. The committed...

  • Page 49
    ... 2007 and 2006, respectively. At January 31, 2007 and 2006, the Company had standby letters of credit outstanding totaling $2.2 billion and $2.3 billion, respectively. These letters of credit were issued primarily for the purchase of inventory and selfinsurance purposes. Wal-Mart 2007 Annual Report...

  • Page 50
    Notes to Consolidated Financial Statements Wal-Mart 2007 Annual Report 48 Net Investment Instruments At January 31, 2007, the Company is party to cross-currency interest rate swaps that hedge its net investment in the United Kingdom. At January 31, 2006, the Company was party to cross-currency ...

  • Page 51
    ... operations in South Korea and Germany, the Company reclassified $603 million from foreign currency translation amounts included in accumulated other comprehensive income into discontinued operations within our Consolidated Statements of Income for fiscal year 2007. Wal-Mart 2007 Annual Report 49

  • Page 52
    Notes to Consolidated Financial Statements Wal-Mart 2007 Annual Report 50 5 The change in the Company's net deferred tax liability is impacted by foreign currency translation. Income Taxes 2007 $4,871 522 883 6,276 (15) 4 100 89 $6,365 2006 $4,646 449 837 5,932 (62) 56 (123) (129) $5,803 2005 ...

  • Page 53
    .... During fiscal 2007, CARHCO was renamed Wal-Mart Central America. Disposals During fiscal 2007, the Company entered into definitive agreements to dispose of our operations in South Korea and Germany, which were included in our International segment. Consequently, the net losses related to these...

  • Page 54
    ... established to grant stock options, restricted (non-vested) stock and performance share compensation awards to its associates, and 210 million shares of common stock to be issued under the Plan have been registered under the Securities Act of 1933. The Company believes that such awards better align...

  • Page 55
    ... in stock. During fiscal 2005, the Company began issuing performance share awards under the Plan which vesting is based on the passage of time and achievement of performance criteria. These awards accrue to the associate based on the extent to which revenue growth and return on investment goals are...

  • Page 56
    Notes to Consolidated Financial Statements Wal-Mart 2007 Annual Report 54 8 Litigation meal-period claims. The plaintiffs are now seeking an additional award of approximately $62 million in statutory penalties, plus prejudgment interest and attorneys' fees. The Company believes it has ...

  • Page 57
    ... Wal-Mart associates who were participants in the Associates Health and Welfare Plan at any time from March 8, 2001, to the present and who were using prescription contraceptives. The class sought amendment of the Plan to include coverage for prescription contraceptives, back pay for all members...

  • Page 58
    ... Consolidated Financial Statements Wal-Mart 2007 Annual Report 56 9 Commitments 10 Operating Leases 842 826 768 698 634 6,678 $10,446 $ Capital Leases $ 538 540 520 505 480 3,132 5,715 29 5,686 1,888 $3,798 Retirement-Related Benefits The Company and certain of its subsidiaries have long-term...

  • Page 59
    ... performance and to allocate resources among each business unit of the Company. The Wal-Mart Stores segment includes the Company's supercenters, discount stores and Neighborhood Markets in the United States, as well as walmart.com. The Sam's Club segment includes the warehouse membership clubs...

  • Page 60
    Notes to Consolidated Financial Statements Wal-Mart 2007 Annual Report 58 In the United States, long-lived assets, net, excluding goodwill and other assets and deferred charges were $62.3 billion, $55.5 billion and $48.4 billion as of January 31, 2007, 2006 and 2005, respectively. In the United ...

  • Page 61
    ...101 hypermarkets in 34 cities in China under the Trust-Mart banner. The purchase price for the 35% interest was $264 million. Also in February 2007, the Company paid $376 million to purchase a loan issued to the selling BCL shareholders which is securitized by the remaining equity of BCL. Concurrent...

  • Page 62
    ...-Mart 2007 Annual Report 60 The Board of Directors and Shareholders, Wal-Mart Stores, Inc. We have audited the accompanying consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2007 and 2006, and the related consolidated statements of income, shareholders' equity, and cash flows...

  • Page 63
    ...States), the consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2007 and 2006, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2007 and our report dated March 26, 2007 expressed an...

  • Page 64
    ... of and address issues in a timely and effective manner. Through the open door policy all associates are encouraged to inform management at the appropriate level when they are concerned about any matter pertaining to Wal-Mart. Wal-Mart has adopted a Statement of Ethics to guide our associates in the...

  • Page 65
    ... Count International(1) State Discount Stores Supercenters Sam's Clubs Neighborhood Markets Country Units Alabama Alaska Arizona Arkansas California Colorado ... New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South...

  • Page 66
    ... Company, N.A. P.O. Box 43069 Providence, Rhode Island 02940-3069 1-800-438-6278 TDD for hearing-impaired inside the United States 1-800-952-9245 Internet: http//www.computershare.com Dividend reinvestment and direct stock purchase available Listing - Stock Symbol: WMT New York Stock Exchange Annual...

  • Page 67
    ..., Inc., an advertising agency and division of Publicis Groupe S.A. H. Lee Scott, Jr. Mr. Scott is the President and Chief Executive Offi fficer of Wal-Mart Stores, Inc. Jack C. Shewmaker Mr. Shewmaker is the President of J-COM, Inc., a consulting company, a retired Wal-Mart executive and a rancher...

  • Page 68
    ... great products and services backed by every day low prices. Come join them. Wal-Mart Stores, Inc. 702 S.W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 www.walmartstores.com For investor information: 479-273-6463 www.walmartstores.com/investors Retail Internet Sites: www.walmart.com www...